If the company has some fixed costs,as sales increase then a/an ________ of sales dollars flows to the bottom line if these costs are truly fixed and do not vary with production or sales.
A)lower percentage
B)higher percentage
C)equal percentage
D)much lower percentage

Question

Quizplus · Accepted Answer

When sales increase, if the fixed costs remain the same, the percentage of sales dollars that flows to the bottom line (net income) increases. This is because the fixed costs are spread over a larger revenue base, reducing the impact of fixed costs on each unit sold. Therefore, a higher percentage (B) of sales dollars flows to the bottom line.

If the Company Has Some Fixed Costs,as Sales Increase Then